The Ministry of Finance on Wednesday announced a new directive for companies to start paying taxes in both local and foreign currency at a 50/50 ratio.
This month-end marks the end of the second quarterly payment date for the year wherein government and the central bank are hoping to spur demand for the Zimbabwe Gold (ZiG). However, the demand for corporates to pay in both local and foreign currencies will impact firms whose revenue sources are predominantly ZiG.
In a statement issued on Wednesday, Finance, Economic Development, and Investment Promotion minister Mthuli Ncube said Treasury was working on a comprehensive review of the ‘Framework of Tax Payments’.
“I wish to advise that payment of Corporate Income Tax should be guided by the provisions of Section 4A of the Finance Act [Cap 23:04], which provides for payment of tax in the equivalent proportion to the currency of trade,” he said. “For example, if a company exclusively transacts in local currency, tax shall accordingly be paid in local currency (ZiG). Similarly, where a corporation transacts in the ratio of 60%:40%, that is, local and foreign currency, respectively, Corporate Income Tax should, accordingly, be accounted for in the same ratio.”
He continued: “However, notwithstanding the current legislative provisions, Treasury authority is hereby granted for corporates to account for the 2024 Second Quarter Corporate Income Tax obligations in both local and foreign currency on a 50:50 basis.”
Treasury has authorised commissioner-general of the Zimbabwe Revenue Authority to manage such transactions on an administrative basis.
“I am also pleased to advise that business and the general public have the option to pay government fees and charges in local currency, unless where specified to the contrary,” Ncube said. “Additionally, customs duty on imported goods is payable in local currency, except for designated foreign currency dutiable non-essential or luxury products.”
Treasury will soon specify the taxes that will be payable in local or foreign currency.
